Companies Increasingly Taking a “Lead-with-Labor” Approach When It Comes
to the Workplace

New CBRE paper reveals that talent shortages are reshaping the
workplace paradigm, with the war for talent influencing all aspects of
real estate decision-making

October 13, 2016 08:30 AM Eastern Daylight Time

LOS ANGELES--(BUSINESS WIRE)--A new paper from CBRE Group, Inc. reveals a paradigm shift in how
companies are approaching real estate decisions today. According to the
paper, the first in a CBRE Thought
Leadership series on workplace performance, the age-old adage,
“location, location, location,” is being replaced with “talent, talent,
talent” as the primary driver behind real estate decision-making.

In a recent survey of global occupiers conducted by CBRE, top corporate
real estate executives cited talent availability as a major criterion
when it came to selecting a market for their workplace. This
“lead-with-labor” approach allows companies to maximize talent
recruitment, while also achieving potential cost savings by locating in
secondary markets where real estate costs are lower, and where talent is
clustering.

“If an organization is able to create a business strategy based on where
it needs talent, possibly relocating certain operations to secondary
markets, they can reduce both real estate costs and the labor costs
compared to major markets,” said Kristin Sexton, managing director,
Labor Analytics, CBRE.

While many companies still prefer to locate in gateway cities for client
access, proximity to suppliers and major transit options, many of these
markets are “already tapped in terms of labor and many of our clients
are asking what lies beyond, what is the next tier of markets in which
to find talent,” said Mark W. Seeley, senior vice president, Labor
Analytics, CBRE.

Though smaller, secondary markets often have a limit to the number of
space requirements they can support, they likely represent the next
phase of growth for employment, according to the CBRE paper. Moreover,
given the reduced competition, such markets allow strong companies to
become the clear preferred employer.

At the core of the war for talent are millennials as companies across
all industries strive to create workplace environments that attract this
critical, yet still somewhat perplexing, next-generation talent.

While conventional wisdom suggests that millennials are obsessed with
living and working in the center of big cities, a recent global survey
of more than 13,000 millennials commissioned by CBRE showed that
three-quarters of employed millennials work in large towns or cities,
split two-to-one in favor of central rather than suburban locations. The
vast majority of the remainder work in small- or medium-sized towns.

Further, when asked to rate each type of location according to its
appeal as a place to work, the millennials surveyed said they preferred
central city locations—but not overwhelmingly, as suburban and small- to
medium-sized towns ranked a close second with 55 percent saying they
find these markets “fairly” or “very” appealing. Even a third of
millennials would be happy working in a business park or campus setting,
and over a quarter find a rural location appealing.

“It’s about cost, community and cultural values,” says Christopher J.
Perri, senior managing director of CBRE’s Global Workplace Solutions
business. “As young tech leaders and other millennials transition into
family-oriented phases of their lives, there’s going to be more of a
need to get out of the city and find alternative locations where they
can still have the ‘cool factor’—but at a manageable cost profile and in
a place where they want to raise their kids.”

“We believe those areas that can replicate the CBD live-work-play
experience are certainly outpacing performance of other suburban areas
and perhaps in some cases maybe even the larger cities,” said Julie
Whelan, head of Americas Occupier Research for CBRE.

The first paper in CBRE’s Thought Series on Workplace Performance can be
viewed here.
To access the compete series, click here.